The Zhitong Finance App learned that Haitong International released a research report indicating that international flights resumed at an accelerated pace during the Spring Festival travel season, domestic and international supply and demand increased sharply compared to 19 years during the peak season, and rigid travel demand led to a sharp rise in airline volume and prices. The recovery trend of the industry was established, and the cycle gradually increased. The increase in domestic demand has established a solid foundation for the recovery of airline performance. With the easing of international relations and the gradual friendliness of policies such as entry and exit visas, demand for international air travel will pick up further in '24; in addition, ground support and airline capacity at overseas airports will gradually recover, and international flights are expected to be further repaired in '24.

Haitong International believes that in the short term, strong demand for private travel on holidays will drive a clear rebound in demand in the travel chain, but business travel during the off-season will be lackluster or slow down the overall recovery progress. Looking at the long term, there is a high degree of certainty that China's airline capacity introduction is slowing down; travel confidence continues to recover, and they are optimistic that the long-term investment logic of the aviation industry will not change in the future (that is, the supply and demand pattern will improve, and ticket price marketization), and wait for the economy to recover. The airline profit center is expected to rise in '24, focusing on investment opportunities in the aviation sector, especially Spring Airlines (601021.SH), HNA Holdings (600221.SH), Juneyao Airlines (603885.SH), and Air China (). 601111.SH

Haitong International's main views are as follows:

March entered the off-season, and supply and demand in the industry declined somewhat

In March, the total supply and demand of the five listed airlines (Air China, China Eastern Airlines, China Southern Airlines, Spring Airlines, and Juneyao Airlines) each fell 5.1%/8.7% month-on-month (Air China data is a combined table, same as below), about 107.5%/105.5% in the same period in '19, and passenger occupancy fell 3.2 percentage points to 81.3% month-on-month, down 1.5 percentage points from the same period in '19. Supply and demand in the industry declined sequentially in March. Specifically, domestic supply and demand each fell 6.2%/10.4% month-on-month, about 121.6%/118.7% in the same period in '19, and the passenger occupancy rate fell 3.8 percentage points to 81.7% month-on-month, down 2.0 percentage points from the same period in '19.

International line supply and demand each fell 1.9%/3.2% month-on-month, to about 80.4%/80.1% in the same period in '19, and the passenger occupancy rate fell 1.1 percentage points to 80.9%, down 0.3 percentage points from the same period in '19; regional line supply and demand each fell 1.1%/7.5% month-on-month, about 82.1%/72.7% in the same period in '19, and the passenger occupancy rate fell 5.0 percentage points to 72.8% month-on-month, down 9.4 percentage points from the same period in '19.

Xiaohang continues to lead the way in Jixiang, domestic and regional routes resume more comprehensive passenger occupancy rates in spring and autumn

In March, the supply and demand of the three major airlines (Air China, China Eastern Airlines, and China Southern Airlines) each fell 5.2%/8.9% month-on-month. Domestic supply and demand increased 18.9%/15.7% respectively from the same period in '19, and declined from the February recovery schedule (129.2%/127.9%). China Airlines' supply-side and demand-side recovery was faster than China Eastern Airlines and China Southern Airlines, and the domestic flight recovery of the three major airlines all surpassed the same period in '19. The recovery of small airlines is different: Juneyao Airlines showed the characteristics of balanced restoration of domestic/international routes. Demand for domestic/international routes exceeded 30.58%/57.86% in the same period in '19, respectively, and total demand recovered to 134.1% in the same period in '19, and total passenger seats fell 0.8 percentage points to 85.4% compared to the same period in '19. Spring Airlines maintained a leading passenger occupancy rate, with total passenger occupancy rates of 89.7%/89.9%/89.9%/88.5%/86.9% for domestic flights and regional flights, respectively.

There were differences in the number of flights and flight conditions operated by each airline in April

From April 1 to April 14, 2024, the number of flights operated by China Eastern Airlines and Lucky Day each increased by 0.8%/12.0% compared to March, and the number of flights operated by Air China\ China Southern Airlines\ Spring and Autumn Days decreased by 3.6%/3.6%/0.8%, respectively, compared to March. In terms of daily aircraft utilization, China Eastern Airlines and Lucky Day increased 0.8%/9.9%, respectively, compared to March, and the daily utilization rates of Air China/China Southern Airlines/Spring Airlines decreased by 3.6%/1.8%/0.9% from March, respectively, reaching 7.4/7.3/7.8/8.3/9.1 hours/day, respectively.

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